American Public Media’s Marketplace radio show recently asked (and answered) “ Why does popcorn at the movies cost so much? ” (August 4, 2014, you can listen or read the transcript). While I thought I knew the whole answer, I only knew half. Check if you know the whole answer – and perhaps use this as a discussion topic when you cover pricing. Can you think of some other reasons why movie popcorn costs so much?

When you think about it, eyeglasses are a pretty small item to buy for$400 or more. Of course there is a great deal of service embedded with that purchase. The question is, can eyeglasses be sold more efficiently. In the last few years, EyeBuyDirect and Zenni have come online offering glasses for as low as $10 — with most frames (with lenses) priced at around $20. A middle tier that includes online retailers like Warby Parker and Ditto offer designer frames and perhaps a nicer website and sell eyeglasses for around $100. Both options are considerably less expensive than the traditional eyeglass retailer — who [Continue Reading …]

Electronic Arts (EA) has been a dominant player in gaming — especially with their live action sports games that are usually played on computers or TVs. Then, along came Zynga, which offered mobile games through social media like Facebook. Since this market is relevant to many of our students, it might be useful to keep up with the latest competitive battles. Now EA is trying to play catch up; EA has a lot of cash to invest into these new markets. n this “listen” at NPR’s Morning Edition, “ Game Giant Forced To Play Catch Up ” (May 4), you can hear what EA is trying to [Continue Reading …]

Showrooming is the practice of shopping in a physical store and then purchasing the product online from home. Online retailers often have cost advantages over their brick-and-mortar competitors; online retailers don’t build stores in high-traffic, high-cost locations, and they don’t need to employ a large, knowledgeable sales staff, many do not have to charge sales tax. Brick-and-mortar retailers do have those costs – and increasingly, customers are going to those physical stores to view products and talk to sales staff before buying online. These advantages, and some great marketing and technology, have fueled Amazon’s rapid growth. This article from the [Continue Reading …]

It has always been difficult for retailers to set prices. Two factors make it even more difficult today. First, customers are better informed — the internet and smartphone apps let them easily check the prices of products they see on retail store shelves. Second, consumers have been conditioned to wait for steep discounts — in department stores very few sales are made at full retail. Retail giants J.C. Penney and Macy’s are trying new strategies to try to maintain profits. Read more at “ Knowing Cost, the Customer Sets the Price ,” New York Times, March 27, 2012. What do you think of J.C. Penney’s new pricing? [Continue Reading …]

The iPhone has considerable market share and mind share among consumers. So how do you break into that market? Maybe you start by copying Apple’s iPad and iPhone . Then you try to differentiate your phone with a larger screen and 4G connection speed. Samsung’s Galaxy 2 S phones have received good reviews. But then how do you battle that Apple mystique? These Samsung ads don’t appear to be targeting Apple loyalists who stand in these lines — they are already too loyal to Apple. And obviously it hits a niche that just hates Apple — but Samsung and Android phones already have a reasonable share [Continue Reading …]

Apple used to be known for high priced, but elegant, hardware. That is no longer the case. This article provides a nice example of two concepts that you will cover when you get to Price. A skim price policy is offering high prices on products to a smaller market before moving later to more price sensitive customers. A penetration price policy tries to sell the whole market at one low price. In the old days Apple was a niche player known for high prices. Now it owns some markets (tablet computers, smartphones, portable music players) and benefits from economies [Continue Reading …]

I have been reading a lot of articles this week about the new line of Amazon Kindles. The most intriguing of these is the Kindle Fire which appears to provide a worthy competitor to the Apple iPad. While more limited, the Fire is also less than half the price. The best article I have found on the new Kindles is from Bloomberg BusinessWeek, “ Amazon, the Company That Ate the World ” (September 28, 2011). This article is long but really digs into the marketing strategy angle from Amazon’s perspective. It also provides a nice compare and contrast of the marketing strategies of Amazon and Apple — [Continue Reading …]